Y Combinator founder: there is no tech bubble(venturebeat.com)
venturebeat.com
Y Combinator founder: there is no tech bubble
http://venturebeat.com/2011/02/17/graham-y-combinator-no-tech-bubble/
64 comments
I think if you're running a big company you have to be cautious about what you say in public. If you're just an investor you can take more risks.
Spending a decade publishing essays that got port-scanned by forum trolls has also helped. It has trained me to make sure what I'm saying is true before I hit submit. (Or at least within a few minutes of hitting submit; I added the delay feature to HN explicitly for this purpose.)
Spending a decade publishing essays that got port-scanned by forum trolls has also helped. It has trained me to make sure what I'm saying is true before I hit submit. (Or at least within a few minutes of hitting submit; I added the delay feature to HN explicitly for this purpose.)
I did not even realize that the delay feature existed. Neat!
>It has trained me to make sure what I'm saying is true before I hit submit.
I was having a conversation with a friend of mine recently about how talking to her was forcing me to research more, and how that was good. Anytime I'm talking to this friend [via email], I'll spend quite a bit more time researching than I do actually writing.
This is one of the many reasons I love HN so much. It's filled with staggeringly brilliant people, and it forces me to go out and learn things before submitting.
So thanks for that.
>It has trained me to make sure what I'm saying is true before I hit submit.
I was having a conversation with a friend of mine recently about how talking to her was forcing me to research more, and how that was good. Anytime I'm talking to this friend [via email], I'll spend quite a bit more time researching than I do actually writing.
This is one of the many reasons I love HN so much. It's filled with staggeringly brilliant people, and it forces me to go out and learn things before submitting.
So thanks for that.
essays... port-scanned by forum trolls
This is a truly priceless mental image.
This is a truly priceless mental image.
I thought it was great that you dropped in on Hacker News — something like this is exactly the kind of low-cost commentary we need from some of the leaders of the valley from time to time.
I feel like there are at least a few disagreements about the state of a tech bubble in the valley. I mean, the poll got a few votes, so it's an issue worth noting — right? Then again, that probably comes from a significant amount of inexperience on my end. But I feel like your opinion is valuable even outside of the subset of the conversation in Hacker News. (Maybe we need a Bolzanno-Weierstrass analogy for discussion within specific venues and the discussion in the valley as a whole.)
I just think something like this is an easy way to get your opinion on the matter without having to get in front of you and waste your time on an issue that isn't exactly pressing. I mean, I don't know how I would feel if reporters hounded me every day asking if I still believed there was a tech bubble. But it's still an issue that obviously a lot of people care about and like to read about.
Anyway, my two cents. But, like I said, I'm pretty inexperienced when it comes to this whole "silicon valley" thing.
I feel like there are at least a few disagreements about the state of a tech bubble in the valley. I mean, the poll got a few votes, so it's an issue worth noting — right? Then again, that probably comes from a significant amount of inexperience on my end. But I feel like your opinion is valuable even outside of the subset of the conversation in Hacker News. (Maybe we need a Bolzanno-Weierstrass analogy for discussion within specific venues and the discussion in the valley as a whole.)
I just think something like this is an easy way to get your opinion on the matter without having to get in front of you and waste your time on an issue that isn't exactly pressing. I mean, I don't know how I would feel if reporters hounded me every day asking if I still believed there was a tech bubble. But it's still an issue that obviously a lot of people care about and like to read about.
Anyway, my two cents. But, like I said, I'm pretty inexperienced when it comes to this whole "silicon valley" thing.
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I've seen Mark around town a couple of times.
The first time I was shocked. I had just moved here and was looking for some curry paste, so I went to Ranch 99 in Mountain View. I turn around the corner, and bam, Mark Zuckerberg and his girl. We had this weird eye contact thing.
I walked around the store a couple of times, running into him again in a similar fashion (I didn't know where anything was at), and ended up being behind him in line.
Second time was in PA, I was just walking downtown to the Vans store, and same thing. Saw him on the street, made eye contact, etc...
Next time I see him I'll probably say hi, but nobody was bugging him. I guess I was surprised that somebody that high profile would be out and about, even in a place like SV.
The first time I was shocked. I had just moved here and was looking for some curry paste, so I went to Ranch 99 in Mountain View. I turn around the corner, and bam, Mark Zuckerberg and his girl. We had this weird eye contact thing.
I walked around the store a couple of times, running into him again in a similar fashion (I didn't know where anything was at), and ended up being behind him in line.
Second time was in PA, I was just walking downtown to the Vans store, and same thing. Saw him on the street, made eye contact, etc...
Next time I see him I'll probably say hi, but nobody was bugging him. I guess I was surprised that somebody that high profile would be out and about, even in a place like SV.
Most egos in the valley are far too big to be starstruck by another geek ;)
I don't think that's exclusive to the Valley, and I've never really understood it.
One of the things I miss about living in a smaller place is when a band would come to town, they would generally play at a smaller venue than they would for a place like SF. After the show, you could go up and talk to them, shoot the shit, etc... The funny thing was, most people still wouldn't take advantage of that opportunity. I usually did, and I got to talk to a lot of cool people because of it.
But while an iconic indie rock legend is still a bit different that someone like Mark Zuckerberg, people are still just people.
One of the things I miss about living in a smaller place is when a band would come to town, they would generally play at a smaller venue than they would for a place like SF. After the show, you could go up and talk to them, shoot the shit, etc... The funny thing was, most people still wouldn't take advantage of that opportunity. I usually did, and I got to talk to a lot of cool people because of it.
But while an iconic indie rock legend is still a bit different that someone like Mark Zuckerberg, people are still just people.
I imagine Mark Zuckerberg has now become a real celebrity. Not just a member of the Tech elite.
Yeah, having just read (and responded to) that comment and then seeing the story, I find it a bit irritating the way a reasonable comment is taken out of context and turned into a sensationalistic headline.
The way I read PG's original comment was not "There Is No Bubble", but rather "Internet companies are a lot cheaper, smarter, and overall better than they were in the 90s".
The way I read PG's original comment was not "There Is No Bubble", but rather "Internet companies are a lot cheaper, smarter, and overall better than they were in the 90s".
I never know what people mean when they call a headline "sensationalistic." Do you mean that the headline made you experience a feeling? Do you object to feelings? Do you prefer reading material that leaves you numb or bored? Bottom line, it's a critique that seems singularly superficial and insubstantial. I think you're probably capable of making smarter observations about an article and I encourage you to do so.
Well you'd expect such a reply from Paul right? He benefits from the lofty valuations when any of the YC incubated companies get bought. So no surprises here.
If I thought there was a bubble and was cynically trying to exploit it, I would have just said nothing.
Right, it would be insane for him to ever publicly communicate any possibility of a bubble, since it would certainly get picked up by the tech press, and potentially cause direct material harm to his interests.
Not that I think Paul is that calculating, but if YC were a public company, it might even be illegal per fiduciary responsibility.
Not that I think Paul is that calculating, but if YC were a public company, it might even be illegal per fiduciary responsibility.
Its also an "away-from" strategy. Imagine you were a hard-hitting tech founder like Paul Graham and there was even a possibility there was a bubble? Everyone knows bubbles can be painful and should be avoided intelligently at all costs.
The right man in the right situation turns "calling a bubble" into a move to focus and motivate. Instead of trying to hide an impending bubble, you are creating the resources necessary to do something that will eventually win mind-share.
Knowing how to generate multiple revenue streams with a fixed engineering cost is a good start.
The right man in the right situation turns "calling a bubble" into a move to focus and motivate. Instead of trying to hide an impending bubble, you are creating the resources necessary to do something that will eventually win mind-share.
Knowing how to generate multiple revenue streams with a fixed engineering cost is a good start.
On a similar note, Barack Obama mentioned in his interview with Fox last week that one of the downsides of being a President is that he lost the ability to have casual conversations with people. A public figure in any domain has to live with this.
If you're Mark Zuckerberg, or Paul Graham,...do you still get to sit at the lunch table with everybody else?
This is such a funny question. I'm the co-founder of http://LetsLunch.com: we let you apply for lunches with Silicon Valley celebrities and you'd be surprised how approachable they can be.
But really, we are a way for fellow HNers to meet each other without the obstruction of a computer screen.
That's because we believe in is that there are plenty of brilliant people you could meet (over lunch...) who are not famous yet. Those are the people you want to get to know. Meeting pg is just icing on the cake :-)
This is such a funny question. I'm the co-founder of http://LetsLunch.com: we let you apply for lunches with Silicon Valley celebrities and you'd be surprised how approachable they can be.
But really, we are a way for fellow HNers to meet each other without the obstruction of a computer screen.
That's because we believe in is that there are plenty of brilliant people you could meet (over lunch...) who are not famous yet. Those are the people you want to get to know. Meeting pg is just icing on the cake :-)
Nothing wrong with a shameless plug :-P (I'm sure you understand that I didn't literally mean lunch...). That seems like it would be really fun, like a blind date, except you're looking for technical connections, not romantic ones.
But by saying lunch, you hit the nail on the head. Actually taking the time to sit down with someone for lunch is one of the highest forms of respect. In contrast, a meeting in a cold conference room doesn't convey the same message.
Just curious, is there a company like LetsLunch in NYC? Are you possibly planning an expansion?
Yes, we are working on expanding, especially NYC. No announcement yet, it's tricky but a very big opportunity.
Also, I've met Matt Lynley.
Not really a fan, but whatever.
(My Personal Opinion: I got the feeling he sort of has a sensationalist persona, but I guess that's what you need to be a "journalist" these days)
Not really a fan, but whatever.
(My Personal Opinion: I got the feeling he sort of has a sensationalist persona, but I guess that's what you need to be a "journalist" these days)
We've met?
Sorry you aren't a fan — but it seems like there aren't many of us in this line of work with fans to begin with.
Sorry you aren't a fan — but it seems like there aren't many of us in this line of work with fans to begin with.
I have a project about it... I am sure more than one of these guys are posting anonymously on the Internet... the challenge is discovering their aliases.
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That being said, PG is uber active here. http://news.ycombinator.com/threads?id=pg
And he used to be here: http://news.ycombinator.com/threads?id=nickb
They probably just do it under a fake name.
Isn't that a huge liability?
I think it depends on what you're doing with it. John Mackey (of Whole Foods) caught some significant flack and legal trouble for talking about Whole Foods stock very glowingly under several aliases. That'd be a problem.
But, if it's just for "shooting the shit", about random topics unrelated to your bottom line, I can't see that it would cause any trouble.
But, if it's just for "shooting the shit", about random topics unrelated to your bottom line, I can't see that it would cause any trouble.
My simple response is, "Denial is a river in Egypt." Paul Graham is not an impartial observer in this debate. YC (and by extension him) are some of the loudest advocates for the current startup generation. Should a bubble burst around them, YC would stand to loose tremendously in money and prestige regardless of the merits of their individual investments.
That's exactly what someone would say if there WAS a tech bubble! We're doomed!
Your comment is funny but true. People will always find rational reasons to explain away sky high valuations. Even the first time around, Pets.com had a very high market potential if it capitalized successfully on projected internal sales growth rates and expanded to the size of the pet care market.
I take all these comments very very lightly. In my experience, the surest sign of a bubble is when the non-savvy bench investors in your life start talking about "great investment opportunities". When 9/10 people in your office are buying a house as an investment opportunity, there is probably a bubble. When 9/10 of your office is investing in the secondary facebook market (or something similar) chances are there is a bubble.
I take all these comments very very lightly. In my experience, the surest sign of a bubble is when the non-savvy bench investors in your life start talking about "great investment opportunities". When 9/10 people in your office are buying a house as an investment opportunity, there is probably a bubble. When 9/10 of your office is investing in the secondary facebook market (or something similar) chances are there is a bubble.
The claim is that the people investing now are super smart guys like Yuri Milner, so there is no bubble.
I'm mildly skeptical - Silicon Valley VCs appear to be as affected by herd mentality as everyone else.
I'm mildly skeptical - Silicon Valley VCs appear to be as affected by herd mentality as everyone else.
All this talk of bubble misses the fact that there is real growth happening in the technology sector.
The growth is a combination of many factors, by mostly it seems, the following:
* redistribution of services from a small office, small local market, to a small office but a global market. The models of today, aren't all that dissimilar to what they used to be, just the internet kills the road warrior salesman/support guys, and PayPal pretty much kills the international banking problems too.
* redistribution of premium telecoms based services from traditionally state controlled companies, to smaller, more agile and less restricted companies: this is a LOT of $$$. Look at the services that 5 years ago, people were talking about mCommerce - they are mostly online and ad-funded, app purchase funded (via Apple or Google, not the telcos), and soon to be Facebook credit funded.
* the depressed global market, making a traditional software engineering or marketing/sales job a riskier proposition, reducing relative risk of startups
* a generation of still young investors who have lived through a real boom/bust cycle, and stayed in the game, and understand at least one of the above factors.
Is there a bubble? Only if this growth collapses. I don't see any reason for it to. The economy will start to recover, the markets for apps will stabilise, and there will be some fallout, but don't confuse real growth for unfounded growth.
(What about the Yuri Milner move? Well, knowing two YC 10 W founders, I'd put whatever stupidly small % of his wealth was, of my own wealth into their company ANY day.)
The growth is a combination of many factors, by mostly it seems, the following:
* redistribution of services from a small office, small local market, to a small office but a global market. The models of today, aren't all that dissimilar to what they used to be, just the internet kills the road warrior salesman/support guys, and PayPal pretty much kills the international banking problems too.
* redistribution of premium telecoms based services from traditionally state controlled companies, to smaller, more agile and less restricted companies: this is a LOT of $$$. Look at the services that 5 years ago, people were talking about mCommerce - they are mostly online and ad-funded, app purchase funded (via Apple or Google, not the telcos), and soon to be Facebook credit funded.
* the depressed global market, making a traditional software engineering or marketing/sales job a riskier proposition, reducing relative risk of startups
* a generation of still young investors who have lived through a real boom/bust cycle, and stayed in the game, and understand at least one of the above factors.
Is there a bubble? Only if this growth collapses. I don't see any reason for it to. The economy will start to recover, the markets for apps will stabilise, and there will be some fallout, but don't confuse real growth for unfounded growth.
(What about the Yuri Milner move? Well, knowing two YC 10 W founders, I'd put whatever stupidly small % of his wealth was, of my own wealth into their company ANY day.)
this is so meta.
I'm writing a post on HN about a article about a post on HN.
I'm writing a post on HN about a article about a post on HN.
Kind of makes you sick doesn't it?
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Even if there is a tech bubble, so what. You just need to do due diligence when dealing with a company. Does the company offer true value or is it a fad? For example, FaceBook. yes, there are millions of people on there, but their revenue source is from ads that have little ROI. Zynga is another one, how long can you convince people to keep buying dresses for your virtual pig?
Except - unless I misinterpreted it - PG didn't quite say that. He pointed out the differences between the tech bubble then and what's occurring now. Sure, I'm nitpicking, but I think it's an important distinction.
If there's a bubble, it will surely be different than before and isn't it a bit early to make sweeping predictions? PG didn't make any.
I am definitely skeptical of this article's conclusion.
Just because Yuri Milner and Mark Zuckerberg are poised to make a lot of money doesn't mean that there are a lot of people out there who are going to hop on tech stocks because they look hot and lose a lot of money.
It's certainly true that Facebook, LinkedIn and other tech companies are making something that has an impact on the lives of others, but that doesn't mean that valuations aren't going to get horribly out of whack.
In fact, Zuckerberg and Milner stand to make a big pile of money if valuations do get horribly out of whack. Just as the banks did during the mortgage loan fiasco.
Just because Yuri Milner and Mark Zuckerberg are poised to make a lot of money doesn't mean that there are a lot of people out there who are going to hop on tech stocks because they look hot and lose a lot of money.
It's certainly true that Facebook, LinkedIn and other tech companies are making something that has an impact on the lives of others, but that doesn't mean that valuations aren't going to get horribly out of whack.
In fact, Zuckerberg and Milner stand to make a big pile of money if valuations do get horribly out of whack. Just as the banks did during the mortgage loan fiasco.
Even if there is a bubble, who cares (in these parts at least)? Back in 2001, you needed money to build a product. The bubble bursting meant no money, and thus no product. These days a downturn won't prevent you from building something.
I haven't experienced the first bubble, so no context there. However at least from my own experience with VC and angel investors, they are all quite risk averse and insist on seeing solid traction/revenue befor even considering investment. Among all the most popular sites, Twitter might be the only bad example and exception here without a solid revenue model, whereas Facebook, Linkedin, and Groupon all boasted a stellar revenue already. I do think the investors have learnt from the last bubble and changed the mentality a lot.
Does this need to be said? Is there anyone suggesting that there is a tech bubble like there was in 2000?
I mean that literally. Is there a single person on the face of the earth voicing that opinion? Because I haven't heard it.
The tech bubble in 2000 was more than overvalued companies, over hyped stories, and big promises. What I see now is the same thing that happens every day in other financial sectors.
I mean that literally. Is there a single person on the face of the earth voicing that opinion? Because I haven't heard it.
The tech bubble in 2000 was more than overvalued companies, over hyped stories, and big promises. What I see now is the same thing that happens every day in other financial sectors.
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Thanks for the post. We don't want investors running away.
This actually reminds me of something that's been bugging me for a while.
If you're Mark Zuckerberg, or Paul Graham, one of the google execs, or basically any high-profile tech person...do you still get to sit at the lunch table with everybody else?
I love talking to people here on HN, or joking around on reddit. I used to be very active on slashdot, and had a lot of really interesting discussions with people there. I can do this because nobody really cares who I am. If I say that I think the iPad is stupid, it doesn't make the news.
So if you're Paul Graham, and you just want to jump into a discussion and "shoot the shit" with people, how do you do it?
Especially if you're Mark Zuckerberg, do you not even get to use the product that you're in charge of because everything you say is going to be dissected by thousands of bloggers and tech journalists? Do you still get to post to slashdot without people thinking that it's an indicator of where facebook is heading?